tv Nightly Business Report PBS June 11, 2013 1:00am-1:31am PDT
when the fed speaks, the market listens, you'll want to hear what the head of the philadelphia fed told nightly business report about the economy, interest rates and what he wants done at next week's meeting. apple's battle plan. tim cook focuses on mobile and shows off the company's newest product during his first event
in the more than six months. and pain at the pump, gas prices are surging in the midwest to record levels in some places, what's behind the drive higher that has motorists fuming. we have all that and more tonight on nightly business report for monday june 10th. good evening, everyone. techies, developers, investors, everyone was anticipating big news out of apple's annual worldwide developers conference in san francisco today. apple did deliver. announcing a number of new products, and updates to its mobile operating system. but did it deliver the hit that analysts say apple needs to turn around the company's stock? john fort was inside today's big apple event in san francisco. tell us more about the big news today, and the reaction inside the room? >> this announcement or these announcements were the kind that tend not to get people that excited at first, but they're really important for apple 3w d
building the foundation for what's next. the most important of those announcements, was the new version of the software that runs the iphone and ipad. the developers inside were very enthusiastic about it, gave it a standing ovation. in fact the new interface has really cleaner lines, simpler icons and multiple pains to give a sense of depth, not to the icons to themselves, but to the way you touch and interact with the operating system. there was some new hardware, most of the news was about software and services. apple announced new mac book airs and also into mac pro. the chief had words for people who says apple can't innovate any more. >> can't innovate any more, my ass. >> pretty direct, i would say. apple also announced a new version of i works, can you do your spreadsheets and documents
in a web browser, also, a version of maps that works on your mac desktop. and finally, itunes radio, this is one a lot of people were waiting for. it is streaming music much like pandora. if you pay for an upgraded fee, you get this all without ads. they hope to have it on the market in september or october. >> the developers gave it a standing ovation. the ios operating system p.m. was the conference considered a disappointment by investors? >> investors didn't seem that jazzed about this, i would say they tend not to be that jazzed unless apple is coming with new hardware that really wows, that has a fresh new design. that doesn't mean this is not important. maybe toward a new tv coming later?
maybe toward things like that, they didn't outright state what those of us who are watching carefully can see. >> everyone who's waiting for that new tv, tell us about this new ios design. how does it stack up against the android, for example? >> very different, as a matter of fact. when you look at this there's a trans louis ens that they have going throughout it, where you can swipe a pane up and see through it a bit. it may see like eye candy at first, but it actually helps you remember what you were doing while you do something else. they use the motion sensors inside the phone to give you a sense of depth, the front icons and the picture in the background move at different rates. they really feel like they're on different plains. >> itunes radio, an admission who steve jobs said people want to own their music, he was wrong and apple recognizes accessing streaming music via android and other devices is a threat to
itunes and more broadly to the apple ecosystem? >> yes, tyler, but apple would also say, even steve jobs could change his mind. >> that was a quick answer. thank you. more changes today at another tech giant, at&t is extending the length of customer contracts for wireless subscribers before they're able to earn a fully subsidized new phone. it moves from 20 months to 24 months. at&t is adding a walkie-talkie like push to talk feature for all of its iphone customers. giant has won a bidding war with facebook. paying for an israeli navigation app. finding ways to drive around traffic jams, construction sites and other road hazards discuss intel is branching out, the company is reportedly in talks
with media giants to lock up content deals for a new tv service it expects to release by the end of this year. >> it's designed to replace your cable box. several companies are said to have already reached an agreement with intel over the distribution of their program. innovation isn't happening just in silicon valley about we'll bring you the story of a blue chip company that's over 100 years old, now bringing cutting edge products to the market. >> stocks took a bit of a breather today. they traded mostly around the flat line. drifting lower as the day unfolded. there were no major earnings reports or economic news to speak of. investors spent another day digesting friday's jobs report shrugging off a boost to the united states credit rating by standard & poors. the economy and the dollar are stronger. at the close, the dow was 9 points lower, 9.5 or
thereabouts. the nasdaq was up by 4. the economy is getting stronger, and the job market is doing much better than people thought, so much so, that it's time for the federal reserve to cut back on stimulating the economy. so says charles pozzer. he's one of the critics of the fed's stimulus program. he's a powerful voice on the central bank's policy economy the that meets next week. when i asked foster today when the fed should start the exit process, he said the sooner the better. if it was just up to me, i would begin scaling back, toning down the doyle a little bit at the next meeting. i think it's justified based on the improvements of the economy since last september. >> why are you confident that the u.s. economy can with stand this policy change as soon as a june meeting?
>> i don't see that a change will have that much effect on the economy at all. financial markets will react. it will be some volatility presumably, and they'll react. the person on main street, the person looking for a job or the company trying to hire a person for a job will largely be unaffected by this, i think. >> why not wait until the economy gets a lot stronger? >> you could always do that but then the risk is, you get behind the curve, and interest rates begin to rise fast. all the reserves we've created in the banking system begin to flow out of the economy. it would be a good sign, except that's going to put the risks higher, inflation down the road. >> what are your thoughts that standard & poors has raised its outlook from negative to stable. >> i think that's a positive sign. fundamentally we haven't solved our fiscal problem. we are still unsustainable
fiscal path. congress has done nothing to really address that at this point. still needs to be addressed, while it's favorable, it's not -- i don't really believe we've stopped our fiscal crisis. >> what do you think are the chances your calling on the fed will root at next week's policy meeting in favor of cutting -- starting the process of cutting back? >> you can read their speeches as well as i can, many of them i've talked about. judging how he we calibrate the degree to which we turn up the dial or turn down the dial, is something we don't have a lot of experience with, or much theory to judge on. so we're doing this through judgment and through discussions with each other, and our colleagues, talking about, how do we think about that? it's a tricky problem. >> if it doesn't happen at the june immediating, could it happen by september? >> sure. sure. >> the longer the economy continues to improve, the more comfortable the committee will feel, that it can dial this back without having adverse commences
if that's what they're afraid of. >> looking at the markets, we've seen how the mere discussion of removing stimulus, what it's done to the markets, what do you think the reaction will really be once the fed does something? >> it depends on which market it is. different markets will react differently. there are many people out there that would welcome some further rises in -- inkreeszs in the interest rate and long term rates if we got out of this. >> are you worried there could be a big stock selloff once the fed starts this process? >> no, i'm not. >> if the market is doing well, because households are doing better, the housing market is doing better, because profits are still strong, and they have lots of cash, there's no particular reason why the market should sell off, and if it does sell off, i think have you to ask the question, well, gee, was all that really real? was it just afemoral. >> i would like to ask you a little bit about the housing market. i'm wondering how these hire
rates could impact the fragile housing economy. >> 8 to 10% a year year over year right now. we don't want to get so far in that we create a problem that we had 5 to 6 years ago. >> are you worried about a bubble brewing in the houses market? >> no, not yet. the housing market is strong right now. why not take the opportunity when a market is strong to pull back somewhat from your support of that market so that it can begin to stand on its own feet and not rely on monetary policy to kind of keep it alive, i don't think that -- that's not what's happening right now, i don't think. >> let's say the housing market stumbles, would you be in favor of pumping in more stimulus? >> probably not. i'm not worried about small rises in mortgage rates that
might be attributed to this, to break that process down. i think it's underway. >> we've seen that the rate on the 30 year mortgage is over 4%. where do you think that will be by the end of the year? >> i don't predict those kind of things. what would do know, even at 4%, slightly over 4%, historically, that's a fairly low mortgage rate, very low, by any stretch of the imagination. >> federal reserve policy makers start their meeting next tuesday. chairman bernanke will hold a news conference to answer questions on fed strategy. president obama has nominated jason fuhrman to be the chairman of the president's council of economic advisers, president obama described fuhrman as a trusted adviser. >> when the stakes are highest, there's no one i'd rather turn to for straightforward, unvarnished advice, that helps
me to do my job. he understands all sides of an argument, not just one side of it. he's worked tirelessly on just about every major economic challenge in the past four and a half years. >> if confirmed by the senate, he'll replace allen kruger returning to princeton, university to teach. the nation's capital was buzzing about the government contractor, edward snoweden, who divulged the inner workings of some top secret u.s. surveillance programs, including the monitoring of verizon cell phone records. boozel profits more than a billion dollars a year from the federal government by outsourcing thousands of intelligence jobs to the private sector. we've been following the story all day. what's going on? >> well, the fact that booz allen was the employer and says he's the man who leaked the nsa
documents to the london guardian and the washington post, that fact has but renewed tension on the whole question of private intelligence contractors, the so called beltway bandit. the washington post is an epic series on these firms a couple years ago, they looked at how pervasive this year is. let me bring in a couple bullet points. you get a sense of the scale of this, some 1,271 government organizations, and 1931 private companies work on programs related to counter terrorism, homeland security and counter intelligence across the united states. in the washington, d.c., 33 building complexes for top secret intelligence work are under construction or have been built since september of 2001. occupying the equivalent of three positions or 22 u.s. capital buildings, about 17 million square feet of space.
analysts who make sense of documents and conversations obtained by foreign and domestic spying share 50,000 intelligence reports each year, a volume so large, that many are routinely overlooked. a lot of the reason, is the explosion we saw in the post september 11th era in intelligence contracting in washington. >> why has the government outsourced so much of this intelligence gathering and analysis? >> well, i think one of the main reasons is the post september 11th boom. they needed to higher a lot of intelligence analysts and needed to hire them quickly. they found they couldn't pay competitive salaries in the government, on the government scale. a cia agent makes government scale salary, where as what we saw here with edward snoweden, he says his salary at 29 years of age was $200,000 a year.
they're able to pay these folks a lot better in the private sector than they are in the government, and that's one reason to do it. >> who overseas all of this? >> well, it's overseen by a secret court that handles this, and, of course, the intelligence committees up here on capitol hill now, they're secret committees, their workings are secret as well. a lot of the criticism has focused on the fact that they're overseen by secret courts and secret committees. >> thank you very much. still ahead on the program, what's behind the surging gas prices that's leaves midwest motorists suffering from sticker shock. let's get a check on how the international markets closed today.
summer driving season is almost here, with many americans hitting the roads. good news, gas prices are lower than they were at this time of year. there are places in the midwest where pump prices are higher and rising fast. >> in the midwest, $4 a gallon gas prices as the summer driving season moves into high gear is sparking near four letter frustration for motorists. >> it makes you feel like you're being strangled. >> what's going on, what's happening. >> there goes all my vacation money. >> the national average is $3.63. in four midwestern states it's more than $4 a gallon. michigan is the highest at $4.22 a gallon up 12 cents in the last week.
with fewer refineries nationwide, other parts of the country could experience similar price spikes. >> you have larger refineries, when larger refineries go offline, they take out the equation of supply wane demand. >> as for the rest of the country this summer's driving season should not be as bad as last year. >> the national average for gasoline at the pump should hold in the mid $3 a gallon range. for nightly business report, i'm hampton pearson in washington. prices are expected to start dropping in the midwest by this coming weekend as those refineries get back online. if you own a honda odyssey minivan, listen up, federal safety regulators have added 320,000 of those older model minivans to a growing probe into faulty front air bags that have already impacted more than 2 million cars from three different automakers. there's no recall yet, but officials say the air bags on 2003 and 2000 ford models can
inflate without a crash. the air bag computers in the odysseys are the same ones used in the '08 toyota and chris livans that have already been recalled. safety regulators are also moving closer to a pontiac g 6 sedan from 2005 to 2008. faulty brake lights, cruise control problems, and complaints about not being able to shift out of park. that is an obstacle. fedex is raising rates, starting july 1st, the delivery giant will increase freight shipping rates by 4.5%. back in january, fedex increased shipping rates for ground and home delivery. says the new increases only apply to freight deliveries. the numbers for lulu were anything but lemons today. that is where we begin our focus tonight, lulu lemon beat estimates for profits after the
bell today. the debacle back in march did not help the ceo. she's stepping down once the company identifies a successor. lulu lemon closed at 82.28 before dropping sharply on the ceo news after the bell. the market isn't giving facebook enough credit for new products and mobile video, facebook shares up almost 4.5% today. and the dow component was a gayner on an analyst note, boosting the target price to $79. suggesting that more profits will come from pharmacy benefit management rather than its health plan businesses. shares of united health care up almost 2%. finishes at 63.7 68. travelers will merge its
canadian subsidiary with dominion based in toronto. travelers shares ended the day down a fraction to $83.30. the largest mortgage insurer for fannie mae and freddie mac said delinquent loans fell 3 and a half% from april to may. at the same time, new home insurance as home buying increa increased. home builders stocks got hit today, that's after jpmorgan downgradable, one of the nation's biggest home builders making shares fall more than 3%. becoming one of the biggest losers in the s&p 500 along the way. some other big home builders followed suit, including kb, toll brothers and dr horton. coming up, we'll take you inside the lab of a blue chip company that's inknow vating like mad, and it's not
headquartered in silicon valley. a look at how treasuries did today. an embattled hedge fun saw investors pull money out of the firm, in the wake of federal insider trading charges a standard quarterly period showed that nearly $3 billion in investor money was taken out of sac, which was in-line with expectations, as the justice department investigates the fund and its founder. no one seems to be pulling out of mcdonalds these days. the world's biggest hamburger chain reported same store sales rose in may. it's late night breakfast
offerings. including a new and healthier egg white sandwich. shares of dow component mcdonald's up more than 1% today. another member of the dow is 3m, which you may know for its post-it notes, packing tape and other household items. 3 m does more than that, spending billions on research and development on new products. michelle caruso cabrera has more on 3 m's products. >> fiber that keeps you warm even in a huge freezer. liquid that looks and acts like water but doesn't hurt electronics. evaporates instantly and puts out fires. 3m, is the center of innovation. even though it's 110 years old, and a long way from silicon valley. for the company, the struggle is always the same, making sure new
inventions in the lab, turn into new products on the shelf. to ensure that happens, 3m uses an internal metric called the vitality process. >> the ceo took the helm of 3m last year, his goal that 40% of the company's revenues should come from products that didn't exist five years ago. >> we still have a ways to go, if you think about it, we're 30 billion u.s. dollar company, and today, 34% of what we are selling didn't exist five years ago. that's a tremendous accomplishment for the company. >> to achieve the higher target, he plans to increase spending on research and development. getting to 6% of revenues, up from roughly 5% in the last decade. having so many consumer products, 3m is susceptible to fluctuations and slowdowns in the economy. >> this is the company which in
particular has a pretty significant skploesh our to asia, particularly technology, optical thins, things that go into touch screens, that's soft right now. >> the weakness in europe didn't help either. >> being that affected by the downturns, also means once the economy makes a turn for the better, 3m sales should improve right along with it, i'm michelle caruso cabrera. >> i thought your interview was interesting, he said he did not think removing the stimulus would affect the stock market very much. >> and he said, if the fundamentals are there, there's no reason to be worried about, we'll see. it could happen, maybe not right away, but in the next couple months, we'll see -- >> it is going to happen, we don't know how the picture ends. but we know how it begins. >> we're going do have to leave it there. that's nightly business report for tonight. thanks for watching. >> have a great night, everybody, we'll see you back here tomorrow evening.